Subdivide doesn't work on face after subdividing and smoothing vertex on another face of mesh
As Mr Zak says above in comments, face with more than 4 verts often give troubles editing, like here. It is usually better to avoid ngons and stick to "quad" face (4 verts. 3 verts is also bad for animation).

But, if you wish, you could edit your mesh first to make the side face a quad face, using knife tool: in ortho side mode, use K, followed by C - to cut straight lines - and Z to cut through all mesh. 

Then click to start the cut, 



click to end the cut 



and press enter to confirm. You get this.



This allows you to to create a loop (since normal face loop tools won't work either, for the same reason as subdivide):



the side face is now a "quad" and subdivide works: